The idea behind payday loans is that they are for short-term borrowing. This is because they are expensive and the interest rate is much higher. It is also extremely important that you fully understand the interest costs and other charges before you take out the loan.

Logbook Loans

Selecting the right loan

When you are shopping the logbook loan market, look at two major factors; the financial aspects of the loan and the customer services standards of the company. While every company says it has high standards of customer service, we choose ones who have customer attested standards so that you can make an informed decision.

How it works

The basic principle of these loans is that you can borrow an amount of money based on the value of your vehicle. This is usually a car under a certain age though there are lenders that offer loans for older cars as well as for vans and motorbikes. They allow you to borrow the money quicker than a traditional method but do charge a higher interest rate.

Options

When you are selecting a loan, look at the terms and how much interest you are going to pay then work out how you are going to pay this back. Remember the worst-case scenario is that if you don’t pay back the money, you could lose your car so don’t take a chance. It will also have a negative effect on your credit rating.

Look at how the company operates too. Some companies will need to see your vehicle before giving you a loan so check how long this will take and what you have to do for this. Also, check if you need to present any other paperwork about the vehicle.

There are some basics every lender should tell you before you take out the loan, such as how much interest you are paying, when the payment is due, what happens if you don’t pay it and how much they charge for late payment. They will also give you information about something called Continuous Payment Authority (CPA) and also how to stop this. Always remember these loans aren’t a substitute for a long-term loan or hire purchase.

Loan repayment

At the beginning of the loan, you will be told what date you need to pay it off as well as how much interest is due and when this date comes, if you haven’t already paid it with a debit card, the lender will take the money from the bank. This is using the CPA and if you don’t have the funds ready for it, you will be charged by your bank.

Should you realise you won’t be able to pay it, stop the CPA at least the day before it is due and get in touch with the lender to discuss further options.

Extending the loan

If you face the prospect of not being able to repay the loan, the first step is to contact the lender. Some lenders may be able to extend the loan for a short period of time depending on their processes and occasionally rollover onto another loan. While this sounds okay, remember that this means another amount of interest being added to the account and if lenders will do it, they won’t usually rollover a loan more than twice.

You could be facing financial problems if this is the scenario and if so, get in touch with someone for help and advice. Your lender will be able to give you some different contact numbers or websites.

Logbook loans for bad credit

Because you are using your vehicle against the loan, then having a bad credit rating isn’t as serious as it would be for other types of credit. However, some lenders don’t provide their lowest interest rates for people with bad credit ratings so you may pay a little more overall. These loans, if they are necessary for you, can also be a way of starting to rebuild your credit rating by paying them off on time, but don’t take them just for this reason.

Conclusion

It is important to remember that you are borrowing this money against your vehicle and if you don’t repay it, the ultimate problem could be the repossession of your vehicle. Remember this and do everything in your power to make sure you pay it off on time.

A-Z Logbook Loan Lenders

Cred24 mission is to help people save money and time in moments when they need fast financial support. Our team analyses payday loan offers every day to give you only the most viable and customer safe options.